Account Based Pension Minimum Drawdown Rates 2026–27

If you have an account based pension, you must withdraw a minimum amount each financial year.

The minimum is based on your age and, for an existing pension, your account balance at 1 July.

If the required minimum is not paid, there can be tax consequences.

If you are new to account based pensions, start here first:
Account Based Pension Explained

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Current minimum drawdown rates (2026–27)

The minimum percentage is determined by your age on 1 July of the relevant financial year. That percentage applies for the entire year.

• Age Minimum Percentage
• Under 65 4%
• 65-74 5%
• 75-79 6%
• 80-84 7%
• 85-89 9%
• 90-94 11%
• 95 or older 14%

These rates apply for the 2026–27 financial year. There are no temporary reductions currently in place.

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How the minimum is calculated

The formula is simple.

Minimum payment = 1 July account balance × relevant age percentage

Example.

John is 68 on 1 July 2026.
His account based pension balance is $600,000.

The minimum rate for age 65–74 is 5%.

$600,000 × 5% = $30,000.

John must withdraw at least $30,000 before 30 June 2027.

He can withdraw more. There is no maximum for a standard retirement phase pension.

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What if you start the pension part way through the year?

In the first year, the minimum is generally calculated on a pro-rata basis.

Your age at the commencement date determines the percentage used, and the calculation is based on your account balance when the pension starts.

For 2026–27, the formula is:

Full annual minimum × (number of days remaining in the financial year ÷ 365)

Example.

Maria starts her pension on 1 January 2027.
Her balance at commencement is $500,000.
She is 62 at that date.

The full annual minimum at 4% would be:

$500,000 × 4% = $20,000.

There are 181 days remaining in the 2026–27 financial year, including 1 January.

Pro-rata minimum:

$20,000 × (181 ÷ 365) = $9,917.81

The minimum payment is rounded to the nearest $10, so Maria's minimum for that financial year is $9,920.

She must withdraw at least that amount before 30 June 2027.

If an account based pension starts on or after 1 June, no minimum payment is required for that first financial year.

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What counts toward the minimum?

Regular pension payments count.

A payment made by way of commutation does not count toward the minimum annual pension requirement.

This is important.

If you commute part of your pension and take the amount as a lump sum, you should not assume that payment has satisfied your annual pension minimum.

If you are weighing lump sums versus pension payments, see:
Account Based Pension vs Lump Sum

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What happens if the minimum is not met?

If the minimum payment is not made:

• The pension can be taken to have stopped for income tax purposes at the start of that financial year.
• Earnings may cease to qualify as exempt current pension income.
• Payments received during the year may be treated as super lump sums for tax purposes.

A new complying pension may then need to be started for future years.

The ATO does have a limited administrative concession for certain small underpayments caused by an honest mistake or circumstances outside the trustee's control. A small underpayment is generally one that is no more than one-twelfth of the required annual minimum, and other conditions also apply.

It is better to check the minimum before 30 June than try to correct a shortfall later.

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Common mistakes

A few issues come up regularly.

• Assuming a payment by way of commutation counts toward the minimum.
• Forgetting the pro-rata rule in the first year.
• Missing the rule that no minimum is required if the pension starts on or after 1 June.
• Using the wrong balance instead of the 1 July balance for an existing pension.
• Misunderstanding which age determines the percentage.
• Forgetting that the calculated minimum is rounded to the nearest $10.

Small errors can have tax consequences, so it is worth checking the calculation before the end of the financial year.

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Why minimum rates increase with age

Minimum percentages rise as you get older.

The minimum pension standards are designed to ensure retirement phase super is used to provide retirement income and is progressively drawn down over time.

At younger retirement ages, the minimum is relatively low at 4%.

It then increases through the age bands, reaching 11% from age 90 to 94 and 14% from age 95.

This means a larger proportion of the pension balance must generally be withdrawn as you get older.

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Strategy considerations

The minimum is just that. A minimum.

Withdrawing only the minimum may preserve capital longer, but it may not meet spending needs.

Withdrawing more than long term returns can reduce how long the account lasts.

Small differences compound over time.

If you want to understand how this interacts with the Age Pension tests, read:
Account Based Pension Age Pension Impact

If you are still working and considering transition strategies, see:
TTR vs Account Based Pension

If you want help working out the right drawdown strategy for your account based pension, learn more about my retirement planning service.

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FAQs

How is the minimum drawdown calculated?

For an existing pension, the minimum drawdown is calculated by applying the relevant age-based percentage to your account balance at 1 July. If the pension starts part way through the financial year, the first minimum is generally calculated on a pro-rata basis using the commencement balance.

What happens if I don’t meet the minimum pension payment?

If the minimum annual payment is not made, the pension can be taken to have stopped for income tax purposes at the start of that financial year. Earnings may no longer qualify as exempt current pension income, although the ATO has a limited concession for certain small underpayments.

Does a lump sum count toward the minimum?

A payment made by way of commutation does not count toward the minimum pension payment requirement.

Is there a maximum withdrawal?

There is no maximum withdrawal for a standard retirement phase account based pension.

Which age determines the minimum percentage?

For an existing pension, your age on 1 July determines the minimum percentage for that financial year. In the first year of a new pension, your age at the commencement date is used.